Bread, flour set for VAT exemption as lobbying heats up
Former Prime Minister Raila Odinga addresses the press after a meeting of Cord MPs July 3, 2013. He asked the Cord MPs to reject the VAT Bill 2013, which would introduce a 16 per cent tax on processed foods. CAROLINE WAFULA
What you need to know:
A statement from the Presidential Press Service said changes would be tabled in Parliament to allow for the two items to be spared the 16 per cent tax proposed in the VAT Bill.
Former Prime Minister Raila Odinga Wednesday asked members of the Coalition for Reforms and Democracy (Cord) to reject the VAT Bill 2013, which would introduce a 16 per cent tax on processed foods.
Maize flour and bread will be removed from the list of commodities to be brought under the Value Added Tax (VAT) even as intense lobbying continued in the National Assembly for other basic items to be exempted.
A statement from the Presidential Press Service said changes would be tabled in Parliament to allow for the two items to be spared the 16 per cent tax proposed in the VAT Bill.
“Following consultations at yesterday’s (Tuesday) Jubilee Parliamentary Group meeting, members agreed to support the amendment when debate on the Bill begins in Parliament,” the statement said.
Given the Jubilee alliance’s numbers in Parliament and bipartisan opposition to the tax on basic commodities, the two items will remain zero rated. Earlier, Aldai MP Cornely Serem had said essential goods should not be subjected to the tax.
“We are determined to exempt essential products from the tax bracket. There is need to seal avenues of tax evasion because the economy has the potential of raising over Sh1 trillion in taxes,” Mr Serem said.
Former Prime Minister Raila Odinga Wednesday asked members of the Coalition for Reforms and Democracy (Cord) to reject the VAT Bill 2013, which would introduce a 16 per cent tax on processed foods.
“If this Bill is passed in its current form, unga (maize flour), milk and bread will be unaffordable to majority poor. It is going to hurt the common man,” Mr Odinga said after addressing Cord MPs.
Both Mr Odinga and Mr Serem said the Bill was important in helping the Kenya Revenue Authority meet its tax targets.
“There are positive aspects on the proposed law that will help simplify the administration of VAT and introduce ICT in the process of payment of taxes,” Mr Odinga said at Parliament Buildings.
Mr Serem said the Bill was important in addressing tax administration to nail tax cheats.
“It is not about the question of tyranny of numbers. It is the issue of principle and what we stand for. I hope that MPs will have their conscience pricked into voting reasonably to support the common man in the streets,” Mr Odinga said.
The new legislation, if passed as proposed, will impose a 16 per cent tax on all food items, agricultural inputs, medicines, sanitary towels, diapers, urine bags, mosquito nets, ordinary paper and newsprint and raise taxation of electricity from 12 to 16 per cent.
The Bill was formally introduced to Parliament on Wednesday and is currently being scrutinised by the Finance, Planning and Trade Committee. The committee is expected to file its report within seven days.
